NML: operating expenses accounting

Dear management of New Millennium Iron,

in addition to the „Letter to Management“ I already sent to you:

I worked me through the quarterly financial reports and MD&As of New Millennium Iron Corp. (NML) since 2011.

At the page „Condensed Interim Consolidated Statement of Comprehensive Loss“ (e.g. page 3 at the quarterly financial report for the quarter ended September 30, 2015) NML announces the condensed amount for the complete general and administrative expenses for each quarter, with a numbered note added that explains where more detailed explanations / information can be found on the further pages regarding this specific number. But with astonishment and great concern the condensed number at the page „Condensed Interim Consolidated Statement of Comprehensive Loss“ for the general administrative expenses doesn’t match with the added up expenses that are listed at the corresponding note?! Please take a look at the following overview, compiled with numbers announced at each quarterly financial report and MD&A from NML uploaded at their SEDAR-page since 2011:

NMLs quarterly operating expenses in Canadian dollars

NMLs quarterly operating expenses(click on the image to see it enlarged!)

Is it normal that I found a significant difference / divergence within the operating expenses that are / were not explained and / or generally not even communicated neither at the quarterly financial reports and MD&As nor at the annual reports with a total amount of over C$ 15.5 milllion since 2011?

Let’s take a look to a company whose transparent communicated financial information I really esteem: First Majestic Silver Corp.! At page 1 of the latest interim financial report (quarter ended September 30, 2015) First Majestic Silver announced general and administrative expenses of US$ 3.878 million for that quarter. At the corresponding note with the number 7 we find a cost breakdown of the general and administrative expenses with a total amount of US$ 3.878 million! Match!

Maybe we take a look at an older interim financial report of First Majestic Silver: for the quarter ended March 31, 2012 the company announced at page for the „condensed consolidated interim statements of income“ general and administrative expense of US$ 4.417 million. At the corresponding note with the number 7 we find a cost breakdown of the general and administrative expenses with a total amount of US$ 4.417 million! Match!

Maybe we have to look additionally at a commodity company which is a neighbor of NML and in the iron ore business, too: Champion Iron Ltd.! By taking a view to their latest interim financial report (quarter ended September 30, 2015) Champion Iron announced at the page „Consolidated Statements of Loss and Comprehensive Loss“ a very detailed cost breakdown of the expenses that occurred during that quarter. It looks like the following:

CHM operating expenses

These are transparent and detailed information in order to inform shareholders comprehensibly and extensively!

All three mentioned commodity companies prepare their financial statements in accordance with IFRS.

NML is obviously incapable and / or unwilling to announce complete operating expenses with a cost breakdown!

So, it is officially a proven fact that NML delivers only nebulous operating expenses to their shareholders!

I demand from the management of NML that they restate every quarterly financial report since 2011 by announcing proper operating expenses including a detailed cost breakdown! Everything else encourages me and probably every other shareholder that NML is hiding information respectively announces inadequate information! Let’s see what a management does that likes to be reelected and in line with the corporate governance „is ultimately responsible for overseeing the management of the business and required to act in the best interests of NML and its shareholders.“

Kind regards from your shareholder,

Markus Linnepe

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